Card Factory Trading Update Reassuring, Valuation ‘Very Attractive’

Card Factory’s (LON: CARD) latest trading update has provided reassurance to investors, with the company expressing confidence in meeting its FY25 adjusted profit before tax expectations, according to Edison analyst Russell Pointon.

Pointon said in a note Thursday that the company’s strategy, which includes expanding its store estate, developing its range, and boosting Partnerships revenue, has driven significant revenue growth. 

The retailer, which is a house stock at Edison, has also delivered promised productivity and efficiency savings, along with margin-enhancing range development and cost management, contributing to improved profitability in the second half of FY25, notes the firm.

The holiday season proved fruitful for CARD, with expanded ranges and strong sales of gifts and celebration essentials driving average transaction values higher. 

This led to like-for-like store growth of 3% during November and December 2024 and an overall year-on-year revenue growth of 4.7%. For the first 11 months of FY25, group sales increased by 6.2% to approximately £507 million, supported by store revenue growth of 5.7% and a 23.5% increase in Partnerships revenue. 

However, online sales showed slower growth, with cardfactory.co.uk up just 0.5%.

Management remains confident in meeting consensus profit expectations for FY25, projecting adjusted profit before tax of £65.7–67 million. 

The company also anticipates mid- to high single-digit growth in FY26, despite facing cost pressures from changes to the National Living Wage and employers’ National Insurance contributions.

Edison’s Pointon also notes that Card Factory’s valuation remains attractive, with prospective P/E multiples significantly discounted compared to its long-term average. 

The firm’s shares rose 0.5% on Thursday but have declined over 4% year-to-date, making the current valuation appealing.